Legacies of opportunity and economic integration: Path dependent labor force participation in Puerto Rico’s development

Abstract

Using a large-scale sample of the working-age population drawn from U.S. decennial census microdata for Puerto Rico, this article evaluates whether theories of labor markets adequately explain labor force participation rates in developing countries that are highly integrated to more developed nations. Significant differences across labor cohorts in the likelihood of participation of men and women indicate that participation is conditioned by historical timing of entry into the work force. A two-equation model is used to estimate the exogenous effect of expected earnings. Cohort differences persist net of controls for education and earnings. This evidence suggests path-dependent participation rates associated to distinct stages of the economic development process, and is most consistent with institutionalist perspectives in the sociology of labor markets. Cohort participation-experience profiles are not consistent with the labor-leisure choice model or with the international division of labor theory.